ACCT 331 Ch 4 Fundamentals of Cost Analysis for Decision Making Test Questions and Answers Already Passed Latest Update

ACCT 331 Ch 4 Fundamentals of Cost Analysis for Decision Making Test Questions and Answers Already Passed Latest Update Differential Analysis - Answers The process of estimating revenues and costs of alternative actions available to decision makers, and of comparing these estimates to the status quo Short run - Answers Period of time over which capacity will be unchanged, usually one year Differential cost - Answers With two or more alternatives, costs that differ among or between alternatives Sunk Costs - Answers Cost incurred in the past that cannot be changed by present or future decisions Total Costs - Answers fixed costs + variable costs Full Cost - Answers Sum of all costs of manufacturing and selling a unit or product (includes both fixed and variable costs) Special Order - Answers Order that will not affect other sales and is usually a short-run occurrence Long-run pricing decisions - Answers - Longer than one year - Pricing a new product Product life cycle - Answers Time from initial research and development to the time that support to the customer ends Target price - Answers price based on customers' perceived value for the product and the price that competitors charge Target cost - Answers Equals the target price minus desired profit margin predatory pricing - Answers Practice of setting price below cost with the intent to drive competitors out of business dumping - Answers Exporting a product to another country at a price below domestic price price discrimination - Answers Practice of selling identical goods to different customers at different prices peak-load pricing - Answers Practice of setting prices highest when the quantity demanded for the product approaches capacity price-fixing - Answers Agreement among business competitors to set prices at a particular level make-or-buy decision - Answers Decision concerning whether to make needed goods internally or purchase them from outside sources Add or Drop Decision - Answers a decision whether to add or drop a product, service, or department Product choice decision - Answers physical surroundings, social circumstances, time, state of mind/mood Constraints - Answers Activities, resources, or policies that limit or bound the attainment of an objective Contribution margin per unit of scarce resource - Answers Contribution margin per unit of a particular input with limited availability Theory of Constraints (TOC) - Answers Focuses on revenue and cost management when faced with bottlenecks bottleneck - Answers Operation where the work required limits production Throughput contribution - Answers Sales dollars minus direct materials costs and variables such as energy and piecework labor An advantage of the differential format is that - Answers it highlights the differences between alternatives Full cost includes - Answers all fixed and variable costs of manufacturing and selling a unit of product